Aterian Inc

The following Compensation Discussion and Analysis describes the material elements of compensation for the following individuals who served as our name executive officers for the year that ended on December 31, 2023 (“Named Executive Officer”), which consists of our Co-Chief Executive Officers, up to two other most highly compensated executive officers who were serving as executive officers as of December 31, 2023, and up to two additional individuals who would have been most highly compensated executive officers but for the fact that such individual was not serving as an executive officer as of December 31, 2023 are:

Summary Compensation Table

The following table sets forth certain information with respect to the compensation paid to our Named Executive Officers for the fiscal years-ended December 31, 2022 and 2023:

Narrative Disclosure to Summary Compensation Table

Employment and Severance Agreements

Yaniv Sarig—We entered into an offer letter with Mr. Sarig, dated April 1, 2015. Pursuant to the offer letter, Mr. Sarig’s base salary was initially $120,000 per year. During his employment, Mr. Sarig has received various base salary adjustments and his salary at the beginning of 2021 was $300,000 per year, which was increased to $350,000 per year, effective May 1, 2021. In January 2023, we amended Mr. Sarig’s salary to be received in mostly Common Stock. Per the terms of that amendment, Mr. Sarig is to receive $60,000 in cash and $290,000 in common stock of the Company after adding a 1.15x multiplier which results in 331,104 shares being issued based on the 20-day average closing price of the Company’s common stock on January 18, 2023. The shares were subject to vesting and would have vested in full on January 19, 2024. On July 26, 2023, Yaniv Sarig resigned as Chief Executive Officer of the Company and from the Board, effective as of July 26, 2023. In connection with his departure, Mr. Sarig and the Company entered into a Separation and Release Agreement, effective July 26, 2023 (the “Separation and Release Agreement”). Pursuant to the Separation and Release Agreement, Mr. Sarig is entitled to a lump sum payment of $0.4 million. All of Mr. Sarig’s unvested equity awards were forfeited as of July 26, 2023.

**Joseph A. Risico **—We entered into an offer letter with Mr. Risico, dated February 8, 2018. Pursuant to the offer letter, Mr. Risico’s base salary was initially $250,000 per year. During his employment, Mr. Risico has received various base salary adjustments and his salary at the beginning of 2023 was $310,000 per year. Effective September 13, 2023, Mr. Risico received an increase in base salary to $325,000.

Arturo Rodriguez —We entered into an offer letter with Mr. Rodriguez, dated September 18, 2017. Pursuant to the offer letter, Mr. Rodriguez’s base salary was initially $250,000 per year. During his employment, Mr. Rodriguez has received various base salary adjustments and his salary at the beginning of 2023 was $310,000 per year. Effective September 13, 2023, Mr. Rodriguez received an increase in base salary to $325,00.

Roi Zahut— We entered into an offer letter with Mr. Zahut, dated January 14, 2019. Pursuant to the offer letter, Mr. Zahut's base salary was initially $225,000 per year. During his employment, Mr. Zahut has received various base salary adjustments and his salary at the beginning of 2023 was $310,000 per year.

Base Salaries/Compensation

Our salaries recognize the experience, skills, knowledge, and responsibilities required of all employees, including our Named Executive Officers. Base salaries and base compensation are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries and compensation with market levels after taking into account individual responsibilities, performance and experience.

Bonuses

For the year-ended December 31, 2023, no bonuses were paid to our Named Executive Officers and none of our Named Executive Officers received any non-equity incentive compensation.

Equity Compensation

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our Board periodically reviews the equity incentive compensation of our Named Executive Officers and from time to time may grant equity incentive awards to them.

On January 19, 2023 and June 12, 2023, we granted 333,104 and 2,037,781 shares of our common stock subject to restricted stock awards to Mr. Sarig , respectively, pursuant to the Aterian, Inc. 2018 Equity Incentive Plan (the “2018 Plan”), of which 28,135 shares vested immediately. The remaining 2,342,750 unvested shares were forfeited on July 26, 2023 when Mr. Sarig resigned from the Company.

On June 12, 2023, we granted 949,357 shares each of our common stock subject to restricted stock awards to Mr. Risico, Mr. Rodriguez and Mr. Zahut, respectively, pursuant to the Aterian, Inc. 2018 Equity Incentive Plan (the “2018 Plan”), of which 24,920 shares vested immediately for the respective recipients. Of the balance, 1/3rd of the shares of restricted common stock shall vest on June 11, 2024, and 1/12th of shares of restricted common stock shall vest each quarterly period thereafter.

On September 13, 2023, we granted 945,946 shares each of our common stock subject to restricted stock awards to Mr. Risico and Mr. Rodriguez, respectively, pursuant to the Aterian, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). Of the balance, 1/3rd of the shares of restricted common stock shall vest on September 13, 2024, and 1/12th of shares of restricted common stock shall vest each quarterly period thereafter, as described in more detail in the “Outstanding Equity Awards at December 31, 2023” table below.

Perquisites, Health, Welfare and Retirement Plans and Benefits

We provide healthcare coverage to our employees. In addition, we have adopted a 401(k) plan for eligible employees. However, we do not currently match any portion of the contributions made by our employees to the 401(k) plan.

Outstanding Equity Awards at December 31, 2023

The following table presents certain information concerning outstanding equity awards held by each of the Named Executive Officers at December 31, 2023:

Non-Employee Director Compensation

Effective August 1, 2021, our compensation committee of the Board (the “Compensation Committee”) approved a formal non-employee director compensation policy. Pursuant to such policy, our non-employee directors were paid the following amounts for the year-ended December 31, 2023 (prorated for service for a partial year), which, at each director’s election was payable one-third in cash and two-thirds in shares of restricted common stock: (i) $150,000 per year to each director; (ii) $25,000 per year to the chairperson of the Board; (iii) $15,000 per year to the chairperson of the Audit Committee; (iv) $10,000 per year to the chairperson of each of the Compensation Committee and the nominating and corporate governance committee of the Board (the “Nominating and Corporate Governance Committee”); (v) $7,500 per year to other members of the Audit Committee; and (vi) $5,000 to other members of each of the Compensation Committee or the Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee was disbanded as of January 1, 2024 with its responsibilities being assumed by the full Board and the independent directors of the Board as appropriate.

On and effective, July 26, 2023, in connection with the appointment of Messrs. Risico and Rodriguez as Co-Chief Executive Officers, Mr. Kurtz and the Company entered into an Advisor Agreement, effective July 26, 2023 (the “Advisor Agreement”), pursuant to which Mr. Kurtz acts as an advisor to senior management of the Company. The initial term of the Advisor Agreement was six months and, subject to the agreement of the Company and Mr. Kurtz the Advisor Agreement was extended for an additional six month period. Mr. Kurtz is paid $10,000 per month for his services pursuant to the Advisor Agreement.

The following table sets forth summary information concerning compensation paid or accrued to the members of our Board for services rendered to us for the fiscal year-ended December 31, 2023:

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee consists of three directors, each of whom is a non-employee director: Ms. Harlam, Mr. Kurtz and Ms. Williams with Ms. Harlam serving as the Chairperson of the Compensation Committee. During 2023, none of the foregoing were an officer or employee of ours, was formerly an officer of ours or had any relationship requiring disclosure by us under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K exists between any of our executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.